Part8 of CXO Priorities | COMPETITION

Business has mostly seen the IT organization as just one of many business support functions, not much different in nature to finance, manufacturing, or HR. Until recently, few business heads recognized IT as a determining factor in a business's ability to gain or lose market share or as the driver of the competitive dynamics of entire industries, Cutter Business Technology Council Fellow Christine Davis noted recently.

Those assumptions were seriously challenged earlier this year when The Wall Street Journal ran "Dog Eat Dog", an article in which Andrew McAfee from Harvard Business School and Erik Brynjolfsson from MIT's Sloan School of Management demonstrated how in the US private sector, at least, companies that use IT most have experienced the biggest growth in market share.

"A company's leadership position today can be disrupted by a competitor the very next day if the competitor is more insightful, more connected to its customers, and quicker to deliver solutions," Davis points out. "This is the new norm in this highly competitive and dynamic environment, and the turbulence will only become more intense and more pervasive as IT usage expands across all industries.

The most important role a CIO can play is as a technology interpreter or facilitator to the business

"The good news is that IT really does matter. The bad news is that as every company and industry becomes more and more dependent on IT over the next 10-20 years, all industries and companies will experience this dog-eat-dog competitive cycle. It is not sufficient to merely react to the competition's last move; companies have to drive the competitive dynamics of their industries to be successful in keeping and/or gaining market share."

Davis says companies that realize how important IT is in determining competitive advantage are changing to ensure they engage IT as a true business partner, forcing IT in turn to become much more agile and increasingly more engaged and integrated with both internal and external customers and suppliers. It's fair to say there is no longer a single industry where the market leader would not have achieved (and retained) the leadership because of strategic use of technology, he says. This is true not only of service industry players like Dell and Wal-Mart, and the like but also of manufacturers like Toyota.

As time progresses technology is increasingly being embedded in a company's "strategic fibre", says Indian-based Prosares Solutions director Rakesh Vajpai. That makes the CIO role vital in ensuring the company is able to leverage maximum advantage from available and emerging technologies. "Consider the developments taking place in Web 2.0 arena," Vajpai says. "A proactive CIO would ensure the key decision makers are made aware of what it means for the business and how the company can benefit from it. This requires the CIO to speak 'business language' and have a deeper understanding of the company's strategic model."

Centre of Innovation

Any CIO who wants to be a part of actually growing and improving the business needs to look beyond "bigger", "better", and "faster" systems or processes, says Mark Thiele, director R&D business operations at VMware. To get beyond this "how to make IT better" mentality you have to create and implement a set of foundational attributes for the IT team that define how it operates day-to-day; how it measures success and how it develops strong talent that can run the business of IT while the CIO does the job of CEO for IT. And you must talk to people, Thiele says.

"Of course you need to meet regularly with the executive team, but you should go beyond that. You need to get comfortable enough with the functions in the business that you can translate opportunities into IT solutions. This can mean working in other departments for a week or more at a time, since having meetings once a month with each executive allows for little more than a chance for the executive to bitch about IT."

IT should also be a centre for innovation, Thiele says, and there is no end to the possibilities. There will always be new ways to use IT, new applications to develop and processes to streamline. However, if you don't know the business, you will most likely just make current slow or failed processes run faster, resulting in little or no real business improvement.

Beyond that, Thiele says, a strong CIO needs to play the role of CEO for IT, employ architectural concepts that account for the entire business in the implementation of any new solutions or processes, and develop a vision in coordination with the broader team. "Innovation, much like communication, is sometimes a very delicate flower and without careful and regular care it will quickly wither and die," he says.